8 posts from April 2013

If your business uses the inventory feature of QuickBooks, it is essential to know about the Inventory Valuation Summary Report.

Located by clicking Reports > Inventory > Inventory Valuation Summary, the following appears (click the image for a larger view):

UNDERSTANDING THE INVENTORY VALUATION SUMMARY REPORT

In addition to listing all the inventory parts and inventory assemblies, this report also provides a recap of:

On hand quantity

Unit of measure (if used)

Average cost of the item

Asset value

Sales price of the item and more...

IS THE REPORT CORRECT?

While this report provides a plethora of data, there are three key numbers within it:

The on-hand quantity for each item

The average cost for each item

The total value of the inventory at the bottom of the report (not shown in the screen shot above)

WILL YOUR ACCOUNTANT HUG YOU?

In a well-functioning inventory system, the total of the inventory valuation summary report will equal the total inventory that appears on your balance sheet report (a summary of what you own and what you owe).

Other postings directly to the inventory account without the proper quantity and cost per item being posted at the same time.

MORE THAN JUST THE TOTALS

In addition to verifying the report totals, it is essential that you verify the average costs of each item as well to ensure they are correct.

Posting errors, selling negative (where the invoice shows the on-hand is not sufficient enough to sell the item) and other missteps within QuickBooks can cause these average numbers to get out of whack very quickly. Bad cost numbers can lead to bad decisons related to gross profit margins!

Since inventory is normally a relatively large portion of the total assets of a business, ensuring that your inventory control system is providing the right results is essential to building better business finances.

NEED HELP SORTING IT ALL OUT?

Finding some leaks, cracks or sinkholes in your inventory within QuickBooks?

I can help.

Take advantage of my 25+ years of QuickBooks and accounting experience to help you get all of this sorted out and corrected. Before starting my own business, I was a CFO in charge of $4 million in inventory, so I understand the potential pain and concern you have in this area.

Unless you are intent on tapping into your inner tax accountant, my advice is to skip the use of the tax line mapping feature in QuickBooks.

When you set up QuickBooks, each account that you add to your chart of accounts has the ability to be "mapped" to a tax line for use in preparing a tax return. The screen shot below shows this feature in action:

YOUR TAX CPA HAS THEIR OWN PLANS

The reason I suggest you skip this feature is this - your tax accountant will take your QuickBooks data and either convert it into their own tax preparation software or move the data around as they want it to be displayed on your business tax return.

Given that, why waste time setting this up when it won't be used? Not to mention, trying to decipher exactly what the right answer is if you did try to do it yourself may quickly serve up a small headache for you.

INSIST ON DOING YOUR OWN TAXES - WHY?

Would you do your own knee surgery? Swap out an electrical transformer on your power lines?

Some things are better left to a professional, and the preparation of your business tax return is certainly one of them. Tap into the skill and expertise of a tax pro - they will not only help you get the facts and figures for the year correct on the return, but should also provide helpful insights on tax planning ideas for the year ahead.

If the argument for doing your own taxes is that you can't afford to hire the services of a tax pro, I would counter that you can't afford not to.

AGREE? DISAGREE?

Even though I am a CPA, I don't do taxes, so I have no vested interest in this issue. However, I hear this question about tax line mapping so often, I wanted to get some unbiased advice out there for you to consider.

I look forward to your feedback, whether you agree or disagree! Just post your comment in the box below.

In our previous lesson on how to do online bill payment in QuickBooks, we took a look at the centralized inbox feature of Bill.com. As mentioned, you can fax, scan, e-mail or upload your documents directly there.

Now, the question is - how do you handle the information that shows up in the inbox?

That's easy - just go to the inbox, select "Create a New Bill" and the following window opens (double-click the image for a larger view):

As you can see in the right hand side of the window, you simply record the same details as you normally would in QuickBooks. Any of the fields with a drop down arrow has information already loaded from your QuickBooks file for easy selection. If you need to add new information (i.e. new vendor), not a problem. That information automatically syncs to your QuickBooks too.

Once entered, click the Save button and your bill is now in the queue to be selected for payment. We'll cover that in the next installment of my Bill.com tutorials.

LESS CLICKS. MORE SAVINGS.

Remember, the main reason of using Bill.com in your business is to bring a new level of efficiency and savings to the bill paying and accounts-payable process.

This question landed in my inbox recently, so I thought we'd take a moment to review the possibilities in more detail.

A QUICK REFRESHER

The Premier version of QuickBooks is the one that has several different "flavors" available. Those are:

Manufacturing and Wholesale Edition

Contractors' Edition

Professional Services Edition

Retail Edition

Non-Profit Edition

General Business Edition

SWITCHING IS DEFINITELY POSSIBLE

When you install QuickBooks Premier, a screen is presented for you to select which of the above "flavors" you want to install. Make the selection and complete the installation.

So, if you wanted to change from one "flavor" to another, you would simply uninstall the version you have. From there, reinstall QuickBooks and choose another version when presented with the appropriate screen. Naturally, if you are in a multi-user environment, everyone has to make this change at the same time - you can't have some users on one "flavor" and others using a different one.

YOUR DATA MOVES WITH YOU

Making the change between versions of QuickBooks Premier does not impact your data file. It follows right along with you once you have reinstalled. Simply click File > Open or Restore Company, locate the file, and you are back in business.

Remember that there are some features that are exclusive to these various "flavors" of QuickBooks Premier. You may not see them in other versions. For example, the Sales Order Fulfillment worksheet is only found in the Manufacturing and Wholesale Edition, so you would not find it in the others.

BONUS - QUICKBOOKS ENTERPRISE WORKS THE SAME WAY!

The ability to change between "flavors" is not just limited to the Premier versions of QuickBooks.

So, for a 5 user edition of QuickBooks Enterprise, the current FSP renewal cost is $950. This takes your total purchase price for the Advanced Inventory Module for QuickBooks Enterprise to $1,949 per year. For a 10 user edition of QuickBooks Enterprise, your annual cost runs $2,449 when you factor in the mandatory renewal of the FSP at $1,450.

THE RIGHT FIT?

The economics above in combination with the functionality of the Advanced Inventory module may make perfect sense for your business.

I also work closely with the Rapid Inventory team and have seen their product in action. In addition, Rapid Inventory for QuickBooks does not require you to have the Enterprise edition - it can also plug into the Pro and Premier editions.

TOTALLY CONFUSED BY ALL THIS?

If you are, I completely understand.

Contact me and we can arrange a consultation to help you sort it all out soon.

QuickBooks has the ability to set and use a reorder point (ROP) for your inventory items!

SETTING THE ROP

The reorder point is simply a numeric field within any inventory part in QuickBooks - it appears toward the bottom of the item setup screen, as shown below (click the image to enlarge it):

Once you set a value in this field, it then works in conjunction with your inventory reorder report to help identify those inventory items that may be running low and need to be ordered.

NO REORDER POINT FOR NON-INVENTORY PARTS

Keep in mind - QuickBooks does not allow for a reorder point to be set for non-inventory items, service items, groups or other classifications. For assemblies, QuickBooks allows for the creation of a "build point" which works in a similar fashion to the reorder point for an inventory part.

At some point in time, you will likely stumble into the term "Undeposited Funds" inside your QuickBooks.

In many cases, the first time you'll see it is when you review customer activity in the customer center, as shown in the sample screen shot below:

And from that point on, you begin to wonder what that is about, and why Undeposited Funds is even there in the first place.

BATCHING CHECKS FOR A DEPOSIT

When it comes time to make a bank deposit, you normally "batch" all the checks up and list them on a single deposit slip, right? (instead of making a separate deposit slip for each check you receive)

In essence, that is all the Undeposited Funds account in QuickBooks is doing for you - it allows you to batch up the customer payments you have posted into one deposit. By doing this, you make it ultra-simple to reconcile and match your deposits in QuickBooks to those recorded on your bank statement each month.

STEP-BY-STEP UNDERSTANDING OF HOW UNDEPOSITED FUNDS WORKS

I have created a guide that shows you exactly how the Undeposited Funds account is supposed to work within your QuickBooks.

In no time, you'll have a crystal clear understanding of the entire process of recording customer payments, batching them up and making deposits in QuickBooks.

My guide comes with a full money-back guarantee. For just $9.95, you'll be able to quickly and easily grab the knowledge you need to work with this critical piece of the QuickBooks puzzle!

Using QuickBooks to create quotes or estimates (these are considered one in the same)?

I'm sure there are times where you would like to attach a picture, drawing or other image to it in the hope that will help close the sale.

As you may know, there are ways to customize some of the data that appears on a quote as well as change the appearance of the quote (i.e. change the fonts, borders, etc.). This is all done via the "Customize" button that sits at the top of the Estimates screen as shown in the image below:

Unfortunately, when it comes to attaching external images, etc. to a quote, that capability does not exist within QuickBooks.

Alternatives to consider:

Reference the extra information within the body of the quote in QuickBooks, then attach those files to the e-mail copy of the quote you send to your customer or prospect.

Consider using an alternative quoting program such as QuoteWerks that allows for much greater control of the quoting process. They even have a link that pushes the data into QuickBooks automatically.

HOW ARE YOU HANDLING THIS?

Do you have another system or software package that addresses this need? Feel free to post your comments in the box at the bottom of the page. I appreciate it!